Bloomberg News

European Stocks, U.S. Futures Advance; Copper, Euro Strengthen

October 12, 2011

Oct. 12 (Bloomberg) -- European stocks and U.S. index futures rose, while 10-year Treasuries dropped for a sixth day, on investors’ optimism Europe will contain its debt crisis. Copper gained the most in four days and the euro strengthened.

The Stoxx Europe 600 Index appreciated 0.5 percent as of 10:23 a.m. in London. Standard & Poor’s 500 Index futures climbed 0.7 percent while the Shanghai Composite Index jumped 3 percent, the biggest gain in a year. The 10-year Treasury note yield increased four basis points to 2.19 percent, copper added 1.9 percent and the euro gained 1 percent against the dollar and 0.7 percent versus the yen.

European Economic and Monetary Affairs Commissioner Olli Rehn said today the region is moving toward a consensus on resolving the “calamity” of the sovereign crisis. Slovakia, the only country that hasn’t ratified a revised bailout fund, was poised for a second vote after failing to approve the package yesterday. Euro-area leaders said this week they will have a plan by November to recapitalize banks.

“There are two main drivers of the current risk-on environment: market expectations for a recapitalization of the banking system and for a leveraging of the European Financial Stability Facility,” said Alessandro Giansanti, a senior rates strategist at ING Groep NV in Amsterdam.

Fiat SpA and Daimler AG led a rally in automakers’ stocks, each climbing more than 3 percent. Burberry Group Plc advanced 4.2 percent as the U.K.’s largest luxury-goods maker reported sales that beat estimates. The advance in S&P 500 futures indicated the benchmark gauge for U.S. equities will climb for a third day.

Alcoa Earnings

Alcoa Inc., the first Dow Jones Industrial Average company to report results, fell 4.6 percent in German trading after it posted profits that missed analysts’ estimates and said European customers “dramatically” cut orders on economic uncertainty.

PepsiCo Inc., the world’s largest snack-foods maker, is scheduled to release earnings later today and JPMorgan Chase & Co. and Google Inc. will report tomorrow, according to data compiled by Bloomberg.

Treasury 30-year notes fell for a sixth day, pushing the yield five basis points higher to 3.15 percent. The U.S. sells $21 billion of 10-year notes today, the second of three auctions of coupon-bearing debt this week totaling $66 billion.

Italian Bonds

Italy’s 10-year bond yield rose five basis points to 5.68 percent and Spain’s note yield increased five basis points to 5.08 percent. The yield on the Greek two-year note jumped 49 basis points to 73.69 percent, with the two-year Irish yield increasing 13 basis points to 7.66 percent. German 30-year bonds fell, with the yield rising two basis points to 2.84 percent as the nation sells as much as 2 billion euros ($2.8 billion) of the securities.

The euro strengthened to $1.3770 from $1.3640 and to 105.37 yen while the Dollar Index slid 0.5 percent. The pound jumped 0.7 percent to $1.5681 even after a report showed U.K. unemployment rose to 8.1 percent, the highest in 15 years, in the three months through August.

The MSCI Emerging Markets Index climbed 1 percent, bringing its six-day gain to 10 percent, the biggest since July 2009. Indonesia’s Jakarta Composite Index rose 1.8 percent after the central bank cut interest rates yesterday.

Gold climbed 1 percent to $1,679.27 an ounce. Corn jumped 0.8 percent to $6.50 a bushel before the U.S. Department of Agriculture monthly crop report. Mexico bought 261,200 metric tons of corn from the U.S., the USDA said yesterday.

--Editors: Justin Carrigan, Mark Gilbert

To contact the reporter on this story: Paul Armstrong in London at Parmstrong10@bloomberg.net

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net


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